Undoubtedly one of the major success stories since the COVID-19 pandemic hit, Zoom continues to accelerate both its revenue growth and its broader product offering - with CEO Eric Yuan committing to a more diverse platform play.
The SaaS communications and collaboration vendor released its Q1 numbers this week, reporting revenues of $956.2 million, up 191% year over year. What's perhaps more interesting though is that the number of customers contributing more than $100,000 in TTM revenue was up 160% year over year, highlighting how larger enterprises are continuing to adapt to distributed work.
Zoom now has approximately 497,000 customers with more than 10 employees, which is up 87% year over year. Commenting on the numbers, CEO Yuan said:
As parts of the world reopened, a few things are clear. First, many customers I talk to are looking to create hybrid solutions as they seek to cautiously reopen some offices; and second, each industry, company and individual varies in their optimal working model.
Zoom is here to help each customer calibrate their future working model in their own way. Many companies are redesigning the workplace to enhance the hybrid work experience.
In a recent study we conducted, 80% of U.S. respondents agreed that all interactions will continue to have a virtual element post-pandemic, and that figure was even higher in many of the other markets we are serving.
Yuan also revealed that Zoom closed its largest ever deal in terms of ARR this quarter, with a leading global financial services firm, which has selected Zoom Meetings to deploy for over 90,000 hosts.
The CEO also made reference to the company's upcoming Zoom Events release, which will be a platform for companies continuing to host events virtually, or that will at least some sort of virtual element. We will be observing this release with interest, given the evidence we have seen of poor quality virtual event platforms in recent months.
However, the real strategic point that Yuan made was how the company has begun to deliver on a platform strategy - both encouraging developers to build Zoom functionality into their own applications, but also to build an ecosystem of apps that exist within the Zoom platform we all know and use today. Yuan said:
In February, we launched our video SDK. In April, we announced our $100 million Zoom Apps Fund to further build our app ecosystem. Zoom Apps is designed to enhance users - to enable users to bring their favorite apps directly into the Zoom experience in a way that inspires collaboration, boosts the efficiency, creates healthier habits and generates much more fun.
The Zoom Apps Fund will see Zoom directly intervene to encourage development on its platform, offering initial funding between $250,000 and $2.5 million to companies that are committed to investing in the Zoom ecosystem. Zoom has said that it will be making investment decisions on a monthly basis and it clearly envisions a future where users can carry out activities beyond video meets on its application.
Zoom CFO Kelly Steckelberg was on the analyst call this week too, to shed some more light on the numbers released. She noted that demand was widespread across products, industry verticals, geographies, new logos and customer cohorts - which is reflected in the strong growth. She explained:
We saw approximately 4x more deals up for renewal in Q1 of FY ‘22 as compared to Q1 of last year. Our renewals, sales and online marketing teams really outperformed its differing renewals and the success is a testament to their hard work and our products strong and lasting value proposition.
The year-over-year growth in revenue for the quarter was driven by a healthy mix between new and existing customers, where new customers accounted for approximately 57% of the incremental revenue and existing customers accounted for 43% of the incremental revenue. This trend towards existing customers was expected considering the tremendous growth in our base last year.
Steckelberg added that Zoom ended the quarter with 1,999 customers generating more than $100,000 in trailing 12 months revenue, but also noted that customers with 10 or fewer employees now represent 37% of revenue, up from 30% in Q1 last year.
On what's in store for the future, she said:
Now, turning to guidance. We are pleased to raise our outlook for Q2 FY ‘22 and the full fiscal year. Please note that the impact and extent of the global pandemic still remain largely unknown. Our outlook is based on our current assessment of the business environment as well as our own research and conversations with customers.
For the second quarter of FY ‘22, we expect revenue to be in the range of $985 million to $990 million. For the full year of FY ‘22, we expect revenue to be in the range of $3.975 billion to $3.99 billion, which would represent approximately 50% year-over-year growth.
And we have seen pretty consistent sales productivity. It's going back to levels that are more reflective of pre-pandemic, but at an elevated level from there given the benefit we have of the global brand awareness, our expanded portfolio of products. And so we are really excited about the future, especially in that upmarket and international as well.